We're told Benzino -- former owner of The Source magazine -- was shot after an argument erupted between family members in the funeral procession.

Benzino was hit and he was rushed to the hospital.

Remarkably ... the rest of the family went on with the funeral and the preacher says when they arrived both the limo and the hearse were blood stained -- according to reports.

Benzino is currently in the hospital.

5:20 PM PST -- The district attorney says Benzino was shot by his nephew Gai Scott, adding, "There has been growing family tension" between the two.

The D.A. says Benzino and Gai were in different cars ... but when the two were side-by-side at some point, his nephew allegedly fired shots.

Gai was charged with assault with intent to murder.

Benzino is currently in stable condition and his co-star Stevie J posted a pic on Instagram of the reality star in the hospital to prove it. B's biceps are bandaged ... so it appears that's where he was shot.